A new proposal has emerged for a controversial, 150-mile transmission line project to carry electricity from power plants in the desert of southeastern California to the coast.

The proposal, issued Tuesday, recommended by the president of the California Public Utilities Commission Michael R. Peevey, would allow San Diego Gas & Electric Co. to build the Sunrise Powerlink Transmission Project without conditions imposed by a proposal endorsed by fellow commissioner Dian Grueneich.

Grueneich's proposal would deny the utility's initial request to build the project through the state park or any American Indian tribal land. However, it would allow SDG&E to build an alternative route provided that the utility agrees to use the line mostly for transporting renewable energy.

On Tuesday, Grueneich said she's willing to modify her proposal Tuesday by taking out a section that requires the utility to prove how and where it would obtain the renewable energy before it can build the project. She would replace it with a requirement that SDG&E use about 91 percent of Sunrise Powerlink's capacity at all time by delivering 8,000 gigawatt-hours of power per year, reported the San Diego Union Tribune.

The proposal also notes that Sunrise Powerlink isn't needed to meet the state's mandate that investor-owned utilities must get at least 20 percent of their electricity from renewable sources by 2010. But it goes on to say that the project will be needed to meet a 33 percent requirement that the state wants the utilities to meet by 2020.

At a recent commission hearing, SDG&E's CEO Debra Reed said the utility couldn't consent to signing an agreement that would require it to use Sunrise Powerlink largely for renewable power.

SDG&E has argued, however, that the project is needed to make sure it can meet the state's 20 percent mandate by 2010. Additionally, Governator Arnold Schwarzenegger supports the project.

The San Diego utility said the transmission line could deliver up to 1 gigawatt of power from some of the solar and geothermalpower plants under development in Imperial Valley. The utility, a subsidiary of Sempra Energy (NYSE: SRE), serves 3.4 million customers in San Diego and southern Orange County.

The project, estimated to cost $1.7 billion, has generated strong opposition from environmentalists and community activists partly because SDG&E originally proposed to build the lines through the Anza-Borrego Desert State Park.

Opponents want the commission to gut the project altogether, arguing that it is unnecessary and would harm the environment.

The utilities commission is scheduled to consider the two proposals, along with a third one, at its Dec. 18 meeting. The third proposal came from an administrative law judge, who recommended rejecting the project entirely, saying SDG&E doesn't need the line to meet the state's renewable energy mandate.

The judge's proposal goes on to say that the project, if built, would cause extensive environmental damage and cost too much for the ratepayers who will have to help pay for it.

The fight highlights the growing number of conflicts between utilities and community groups across the country over building power lines to meet renewable energy mandates by states (see SoCal Edison to Buy 909MW of Wind Power).

Schwarzenegger, who prides himself on being a staunch renewable energy supporter, is seeking to minimize environmental objections. This week he issued an executive order requesting the California Energy Commission and the state Department of Fish and Game to work closely together on issuing permits (see Schwarzenegger: Permitting Process Too Complicated).

During the ceremony to sign the executive order, Schwarzenegger described how an endangered squirrel species delayed a solar power plant from getting permits.

"A solar farm in Victorville is being held up because of an [endangered] squirrel. I love squirrels. They have never seen squirrels, but they are worried that if squirrels come, then they need to set extra property aside," Schwarzenegger said at the singing ceremony. "It's one of the unfortunate things that environmental regulations are holding up environmental progress."

Utilities and many renewable energy advocates, such as Al Gore, have championed upgrading and building new transmission lines to replace the United States' aging electric grid. They say a revamped grid is needed to support the growth of solar and wind energy projects, some of which are located in remote areas. To do so could cost $900 billion by 2030, according to the Brattle Group (see National Grid: Dream or Reality? and Al Gore Sets Energy Goal).